Readmission Penalties Set to Take Effect

It's the kind of news that makes financial leaders shudder: 2,211 hospitals stand to forfeit an estimated $280 million in Medicare funds beginning October 1, as year one of Medicare readmissions penalties take effect in October 1st.

With each claim that providers submit, a penalty of up to 1% may be deducted from the organization's Medicare reimbursements under a provision of the Patient Protection and Affordable Care Act.

How widespread will the financial penalties be? A Kaiser Health analysis of Centers for Medicare & Medicaid Services data indicates that 278 hospitals (8.3%) stand to receive the maximum, while 1,933 (57.4%) of hospitals will receive other penalties. The average penalty will be approximately $125,000, and an estimated 1,156 hospitals (34.3%) will receive no penalty.

Gundersen Lutheran Health System in La Crosse, WI, an integrated system that operates a 325-bed hospital, is among the organizations with readmissions rates that will not to be penalized this year. "We've been doing patient- and family-centered care for some time, but the emphasis and awareness of what happens if things go wrong has certainly increased with the [readmissions] penalties," says Jerry Arndt, senior vice president and CFO.